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Giuseppe Valiante, National Bureau

Apr 23, 2014

, Last Updated: 6:13 PM ET

OTTAWA — The Conservative government decided not to wait for the U.S. to act and on Wednesday announced its own three-year deadline to replace or retrofit all the high-risk tank cars that transport flammable liquids by rail across the country.

Transport Minister Lisa Raitt said the government will ban the substandard DOT-111s tankers from carrying flammable liquids on Canadian railroads by May 2017.

However, 5,000 of the most dangerous tankers will be barred from transporting crude in Canada in 30 days, Raitt said.

Raitt's announcement was in response to the Transportation Safety Board's safety recommendations following its investigation of last summer's train derailment and explosion in Lac-Megantic, Que., that killed 47 people.

The runaway train had 72 aging DOT-111s tankers carrying crude oil from North Dakota. The TSB said the old tankers, built before standards were upgraded in October 2011, were prone to puncture and explosions.

A gigantic ball of fire rises from the fire started by the train derailment in Lac Megantic, Que., July 6, 2013. (Steve Poulin / QMI Agency)

Raitt said all of the tankers carrying flammable liquids on Canadian railroads after May 2017 will be built to the 2011 safety standards.

The new rules will help make Canada's rail system safer, Raitt said, not just in response to last summer's disaster, but also in light of the dramatic increase of crude being transported by rail across North America.

The faster phase-out of older cars in Canada raises the possibility that these cars will be diverted for use exclusively in the U.S. if Washington doesn't move with similar speed.

Norfolk Southern Corp CEO Charles Moorman said if U.S. regulators also order a fast phase-out, it could have a "limiting impact" on the shipment of crude by rail and "would probably present some problems" for the railway operator.

Raitt said the government's three-year deadline to replace or retrofit the tankers is "aggressive" and considered ambitious by the rail industry.

Earlier this month, however, a vice-president with the Canadian Association of Petroleum Producers — whose members own many of the DOT-111s in service — told QMI Agency a three-year deadline was reasonable.

Raitt said roughly 65,000 DOT-111s made to pre-2011 standards are in circulation in North America and the government's legislation will apply to the roughly one-third that operate in Canada.

Raitt wouldn't say how much replacing all the tankers will cost, but the rail industry has previously estimated that each car will cost about $150,000.

Raitt also announced Wednesday that railway companies will be immediately required to reduce the speed of trains shipping dangerous goods across Canada.

Railways will also have 180 days to adopt "new permanent rules on operating practices," and shippers will have 150 days to create new emergency response plans for the transportation of flammable liquids, Raitt said.

TSB chairwoman Wendy Tadros said she's "encouraged" by Raitt's "strong response to the board's recommendations," but she will need more time to study the new rules.

Lac-Megantic Mayor Colette Roy-Laroche said she's "satisfied" with the safety requirements. However, she said Raitt's announcement doesn't force railway operators to own enough liability insurance to cover the cost of disasters.

Canadian taxpayers are currently on the hook for tens of millions in cleanup costs in Lac-Megantic because the short-line railway that owned the train didn't have enough liability insurance.